Archive for Monday, March 27, 2006

Stores: Drug plan a burden

Reimbursement rates squeezing small pharmacies

March 27, 2006


Round Corner Drug Store pharmacist Tom Wilcox filled a prescription last week for one of his Medicare Part D customers.

It cost him $178.

He later learned the customer's drug plan, Humana, planned on paying him $178.54.

"I called Humana and said there had to be a mistake - you can't expect a pharmacy to fill a $178 prescription for 54 cents," said Wilcox, who has filled prescriptions at Round Corner, 801 Mass., for the last 21 years.

"They checked and said, no, that was correct," he said. "When I said that's crazy, they said I shouldn't have signed on if I didn't like it."

But Wilcox said he didn't have much choice. Most of his Medicare Part D customers signed up with Humana because its premiums were by far the lowest: less than $10 a month. The others are charging between $20 and $30.

"Most people went with Humana, definitely," he said.

Wilcox is far from alone in his complaints. Independent pharmacists across the city and state say all but one of the new Medicare Part D plans are designed to steer their customers toward large, chain-owned pharmacies that rely on volume to hold down prices. Independent pharmacies, they said, rely less on volume, more on customer loyalty.

Mark Smith, pharmacist at Orchards Drug, 1410 Kasold Drive, center, works with pharmacy interns Ashley Langford, left, and Beth Ohnsat. Smith and other independent pharmacy owners say the new reimbursement rates from some Medicare Part D providers are not high enough to maintain a healthy bottom line.

Mark Smith, pharmacist at Orchards Drug, 1410 Kasold Drive, center, works with pharmacy interns Ashley Langford, left, and Beth Ohnsat. Smith and other independent pharmacy owners say the new reimbursement rates from some Medicare Part D providers are not high enough to maintain a healthy bottom line.

They say some independent pharmacies - many, perhaps - are likely to be forced out of business.

"Over the years, I've seen a lot things come and go. We used to have two or three pharmacies downtown (Lawrence); now there's one," Wilcox said. "But what's on the horizon now is really scary."

Competitive rates?

Mark Smith, pharmacist at Orchards Drug, 1410 Kasold Drive, doesn't have many good things to say about the Medicare rates, either.

"What they're paying doesn't cover our costs," Smith said, noting that he has filled several prescriptions for Humana customers for $2 and $3 apiece, while pharmacies generally need to make $9 to $10 a prescription to turn a profit.

"You can't sell prescriptions for $2 and stay in business," he said.

If Humana's reimbursements don't improve, Smith said, he'll begin advising his customers that he won't accept Humana in 2007.

It's a widespread problem, officials say.

"The independents are being squeezed by reimbursements that are below cost," said John Kiefhaber, executive director at the Kansas Pharmacists Assn.

Humana and UnitedHealth Group are two of the nation's largest Medicare Part D providers. They're aligned with Wal-Mart and Walgreens, respectively.

Mary Sellers, a spokeswoman for Humana, said the company's rates were reviewed and approved by the federal Centers for Medicare and Medicaid Services. She said the rates were competitive.

"If they (independent pharmacies) don't want to be part of the network, that's fine," she said. "Their role won't go away. If that's what they think, it's an overblown concern."

Not so, Wilcox said.

"When we first opened, we were 20 percent insurance, 80 percent cash," he said. "Now, we're 20 percent cash, 80 percent insurance. Medicare and Medicaid make up a big part of that 80 percent."

Other problems

The pharmacy association's Kiefhaber said Medicare Part D's shortcomings aren't limited to pinchpenny reimbursements.

"Cash flow is a huge problem," Kiefhaber said. "Pharmacies that have been on 14- and 28-day pay cycles are now on 45-day cycles. For the first time, they're having to borrow money to cover the difference between when they get paid and when they have to pay their wholesalers."

He added, "Most wholesalers require payment in 10 or 14 days."

Pharmacists, he said, are livid over being taken for granted after single-handedly keeping Medicare Part D afloat in January and February, a chaotic time when the plans' computer and telephone lines often were jammed.

"We - the pharmacists - are the one who funded this thing for the first 30 to 45 days. There's absolutely no doubt about that," said Jim Coast, pharmacist at Clark Pharmacy in Cimarron.

Medicare Part D, he said, is designed to reap huge profits for both the insurers and the drug companies.

"Those of us at the bottom of the food chain are being told to suck it up or get out of the business," he said.

Coast warned that small towns are doubly vulnerable.

"Not everybody has a Wal-Mart or a Walgreens," he said. "My mother is 85 years old and in a nursing home, but what if she wasn't? What if (Clark Pharmacy) wasn't here? Do we really want her driving 20 miles to Dodge City to get a prescription filled? I don't think so."

Coast said he refused to contract with Humana.

"Out of the 15 companies that have plans out there, we signed up with five," he said. "There's no way I would have gone with Humana."

Several pharmacists questioned Humana's relationship with Wal-Mart.

"I'd sure like to know what their reimbursement contract with Wal-Mart is," said Steve Smith, who owns Steve's Corner Drugs in Hiawatha. "I studied every one of the plans, and Humana's had the worst reimbursement. It was 10 percent below cost. I can't imagine that's what they're paying Wal-Mart."

Not so, said Humana spokeswoman Sellers.

"That's not correct," she said. "That's pure speculation on his part."

Steve Smith said he encouraged his customers to steer clear of Humana and instead embrace Community Care Rx, a plan that pharmacists had a hand in writing.

"The premiums are higher, but the co-pays are lower - and I can stay in business," he said.

Fighting back

In Lawrence, Jeff Sigler at Sigler Pharmacy, 4525 W. Sixth St., started telling his customers last fall that he would not take Humana.

"As far as I know, I haven't lost a single customer," Sigler said.

Larry Kocot, a senior adviser at Centers for Medicare and Medicaid Services in Washington, D.C., said Sigler did what more independent pharmacies should do: exercise their rights in an increasingly free marketplace.

"The whole pharmacy business has been in kind of realignment-of-incentives phase for the past few years because it's become clear to the third-party payers that there are a lot of ways to get pills to people," Kocot said.

But pharmacists, he said, do more than distribute pills: They provide a "connection, a special relationship that people want."

The only way to derail the plans' race to pennies-over-cost reimbursements, Kocot said, is to provide a service customers are willing to pay for.

Most Medicare Part D customers, he said, want to stay with their pharmacies and will choose the plans that let them stay.

Sigler's customers, for example, stayed with him.

"Some pharmacies have realized their place in the marketplace," Kocot said. "Others have decided to accept whatever comes over the door. All I can say is they're going to have to adjust to this new marketplace reality."


cowboy 12 years, 2 months ago

The war on drugs is in full swing with admin crony's gettting exactly what they want , drug companies making windfall profits , and seniors getting screwed.

Psssst , hey Mabel , wanna buy some good arthritis meds , the first one's free !

just_another_bozo_on_this_bus 12 years, 2 months ago

"Medicare Part D, he said, is designed to reap huge profits for both the insurers and the drug companies."

Bingo. And Wal-Mart doesn't have to make money on this. If this situation drives enough of its small competitors out of business, they'll be in a position cash in big in a couple of years. This is just a new twist on predatory retailing, but still familiar territory for WalMart.

just_another_bozo_on_this_bus 12 years, 2 months ago

BushCo aren't complicit in this with the BigPharm, macon, and WalMart has the clout to make sure they get their cut in this huge scam.

just_another_bozo_on_this_bus 12 years, 2 months ago

That's the little voices in your head or on Faux News saying that, macon, not the "whiney liberals."

bankboy119 12 years, 2 months ago

bozo you're right on this one. It is predatory pricing no matter how they want to look at it.

At the same time it is because liberals vote to have the government take care of them instead of doing it themselves.

assistant1234 12 years, 2 months ago

If we could finally privatize social security and make individuals responsible for their retirement, people would have more money and be able to pay the fair market price for health insurance and medications.

Godot 12 years, 2 months ago

I'm surprised the small pharmacies haven't united to organize a buying coop so they can negotiate lower prices with the pharmas the way the big chains do. It is the only way they will survive.

My father in law is so loyal to Round Corner that he is not going to buy Plan D, even though it would save him at least $200 per month, net.

yourworstnightmare 12 years, 2 months ago

C'mon. We all know it is the elderly's own fault for getting sick and old and not saving enough maney to care for themselves. Why should the government be responsible for taking care of those who refuse to take care of themselves? Sheesh.

cutny 12 years, 2 months ago

Hey Macon, I didn't know you were clairvoyant enough to know who I blame for this mess, but it ain't the old people. Maybe you need to adjust the antenna in your head or chew on some more aluminum foil.

You're a genius.

badger 12 years, 2 months ago

So the Republican-controlled House and the Republican-controlled Senate and the Republican-controlled Executive Branch put a plan in place that increases the troubles of the elderly, hurts small businesses, helps large pharmacy chains, helps insurance companies, and helps drug companies, and somehow it's liberals' fault?

Oh, oh, wait, I get it. Because Medicare exists at all, THAT part is what makes this whole mess Liberals' fault. I see. Well, then, bankboy, if it's just those pesky bleeding-heart liberals handing out free rides to those slacker freeloading old people, why don't the fine and upstanding conservatives, who have essentially complete control over the federal government, just get rid of it? I mean, if it's so important that we stop government from taking care of people who can't take care of themselves, then let's start with the old people. If we cut off their medications, most of them won't live long enough to vote again anyway. If we cut out free medical care for children, then that's a whole generation of poor kids who can just learn to tough it out! It'll give them character, just like mowing lawns - except that they don't really have lawns, or parks (cause why keep wasting money on those?) or any other green spaces. Who needs free vaccinations? They're just sponging.

So, why is it again that no one ever seriously proposes actually cutting Medicare or Social Security, if they're just coddling a bunch of people who didn't work hard enough or who don't have children who can support them? Why, I wonder, is that?

I may not agree with certain aspects of the current level of social service spending, but the one thing I do agree with wholeheartedly is that a nation can be judged as a culture by how it treats its elderly and its infirm, and that when we jerk ours around promising them 'savings' (My grandmother's alleged savings work out to about three to five dollars a month, but now she has to find someone to drive her across town because none of her neighborhood pharmacies will accept her plan) and convenience and instead delivering insane amounts of paperwork, confusion, and fear, I don't really like the way that makes us look as a culture.

We've advanced medical science so quickly that people are living much longer than they ever planned to. That's a good thing, but because it happened so quickly, retirement formulas that were based on 10-15 years of life after retirement are now having to cover 25-30.

Medicare is mismanaged, poorly understood, and somewhat of a money pit, but living in a nation without some sort of provision for the medical care and health of its elderly and infirm isn't one I really care to contemplate.

Confrontation 12 years, 2 months ago

"Steve Smith said he encouraged his customers to steer clear of Humana and instead embrace Community Care Rx, a plan that pharmacists had a hand in writing.

"The premiums are higher, but the co-pays are lower - and I can stay in business," he said."

Okay, Steve. Let's get all the old people who can't afford food, rent, transporation, or anyting else, to keep shopping with you. Afterall, we wouldn't want you to lose your overpaid pharmacist position. You're just mad because Humana won't let you screw the elderly like you have been doing. Why should these customers chose your business over their other needs? Is customer loyalty more important than nutritional needs? How "loyal" are you when you overcharge for meds? I agree that 50 cents for one med prescription may be tough, but these people can't afford anything else. I'm sure you can continue to rip off your younger customers.

feeble 12 years, 2 months ago

Someone remind me again why companies that take US Gov't money to fund their research, are given large tax breaks to easy the cost of developing product, get priority on new patents, are allowed to push untested or minimaly tested products through a industry influenced and controlled "goverment" advisory board and into the market place get to charge US Citizens 1000% markup?

For the corporations; by the corporations!

mom_of_three 12 years, 2 months ago

Confrontation - I think you need to avert your anger to the drug companies, and not the neighborhood pharmacist. It's the drug companies who set high prices and make tons of money off the drugs that some people need to survive. The pharmacist in turn needs to make a profit to pay for the staff, utilities, required computer systems, pharmaceutical supplies, and last, but not least, his license renewal, which isn't cheap. I don't think he can stay in business for a fifty cent profit per prescription.
He merely suggested another option for his customers, (higher premium, lower copay) which is probably about the same out of pocket expenses as (lower premium, higher copay).

Dorothy Hoyt-Reed 12 years, 2 months ago

Let's hope Wal Mart doesn't get too much control. If you do business with them, don't allow them to change your prescription. They also don't pay attention to your drug interactions like other pharmacies do. My nephew almost died from their antics. The only reason he couldn't sue is because his wife works for WalMart and they need the insurance. He has a kidney problem and needs a transplant. Now that he is on disability, perhaps Medicare will let him buy his drugs elsewhere. Until then, he makes sure all his doctors know what they are perscribing, and if the pills don't look the same as before, he demands answers.

badger 12 years, 2 months ago

Confrontation -

It's hardly the pharmacies that are screwing the elderly. You know what? 'Higher premium, lower copay' actually may be better than the other way around. If the annual out-of-pocket is about the same for both, the 'higher copay' option might be just fine until someone develops a new condition that requires three new prescriptions. Then the overall cost to them goes up less. If you have a lot of prescription needs, like many elderly people do, then there's going to be a balance point where it works out in your favor to pay the higher premium, and I don't think that a lot of people had the plans adequately explained to them, in a way that would make total annual cost clear.

And since it doesn't seem you can change plans mid-year, if they get that new diagnosis early on, then they're stuck paying that extra money all year long.

Honestly, I'd trust my pharmacist to look out for my interests long before I'd trust my insurance provider. Pharmacists have warned me about drug interactions my doctor forgot to mention to me, including an interaction with a vitamin supplement I was taking (doc never even asked...), and they've answered questions about side effects at three in the morning, and when a doctor forgot to note that the generic option was OK, they've called to clarify that it was, and saved me 25 bucks even when they could have sold me the name brand without comment.

By contrast, my insurance provider has now sent my card to three different incorrect addresses, spelled my name wrong twice, and sent me someone else's bill for an appendectomy (I still have my appendix). When I call the '24-hour help line' to try to straighten things out, I navigate a touchtone menu for a minimum of five levels before I ever get the option of talking to a person, and after 9 PM, the 'average hold time' is 'greater than 15 minutes.'

So excuse me, but if I have to decide who's more likely to have some concept of the interests of their customers, pharmacists or insurance agents, I'm pretty sure I'll pick pharmacists every single time.

badger 12 years, 2 months ago

Odd. The first paragraph is missing some words that were there in the preview. It should read, "Then, with the 'higher premium' option, the overall cost to them goes up less," which makes more sense than what's there.

Bother the word-stealing gnomes again.

Confrontation 12 years, 2 months ago

I'm pretty sure the pharmacist is supposed to warn you about drug interactions, since that's their job. The pharmacists at Walgreens and WalMart have to do the same thing. Who says those at WalMart are less caring? I've had nothing but positive experiences at the chain stores. Sure, it sucks to see the mom and pop places go down the tube, but most of us have no choice when it comes to paying for meds. If the higher premium, lower co-pay will save money for the elderly, than I'm all for it. I suppose that would have to be looked at on an individual basis. I also didn't say that insurance companies are more reliable than pharmacists. I think they are both just trying to make money. If a personal relationship with your pharmacist is more important that saving money, then lucky you for having that option. Many people don't have that option.

AttaGirl 12 years, 2 months ago

Well prescriptions here in the United States are way too expensive. I now get mine from Canada. If I were to get mine in the US, I would spend over 500.00 a month, but now, I spend only 225.00 US dollars a month by going the Canadian route.

Dorothy Hoyt-Reed 12 years, 2 months ago

How careful does a Wal Mart pharmacist have to be, if they know few people can sue them? How many people could even afford to go up against Wal Mart? They could keep you in court until you're 100 years old. I do my business with a corporation, Dillons, but it's not the monolith that WalMart has become. Just be aware if your pills are suddenly a different shape or color. They may have changed brands on you, and the different brand may be harmful to you. This is part of what happened to my nephew. Fortunately he has recovered enough to be a candidate for a transplant.

pharm01 12 years, 2 months ago

The lack of regulation of Pharmacy Benefit Managers (PBMs) by CMS is what is appalling. Recently I've learned of just one of many issues that concerns me. Two recent lawsuits in New York and Massachusetts have revealed that benefit managers quietly have been making large profits through secret rebate agreements with drug manufacturers. According to the New York attorney general's lawsuit, the PBM Express Scripts pushed more expensive drugs on state employees to reap larger rebates from drug companies. And rather than these savings being passed on to purchasers and consumers, the money has largely remained in the pockets of PBMs.
Also, PBMs have tried to push their beneficiaries towards mail-order. But many of the nation's largest PBMs, including Medco Health Solutions, Express Scripts and Caremark Rx own and operate mail-order pharmacies.

mom_of_three 12 years, 2 months ago

I personnally chose a locally owned pharmacy over the large chain stores. The wait isn't nearly as long, most stores deliver and the service is so much better. I can see why the elderly customers of the locally owned stores want to patronize those establishments. I know Wal-mart and Walgreens doesn't deliver, but I am not sure about Dillons.

Wal-mart is only out for themselves. My problems with them doesn't involve the pharmacies, but they don't care about their customers if it involves saving themselves a buck.

bearded_gnome 12 years, 2 months ago

"word stealing gnomes" indeed, pish posh!

gaiapapaya 12 years, 2 months ago

Tom Wilcox rocks! He once gave me a script that I could not take while breastfeeding. He and my doctor both missed it. As it was for mastitis, I didn't say I was breastfeeding. When I called back about it, he took the meds back (brand new expensive Cipro during the anthrax deal) and gave me a different antibiotic, without a new co-pay. I can't say for sure, because we only frequent Roundcorner, but I think that would never have happend at Walgreens or Walmart. Roundcorner has the nicest employees and they work really hard to make sure everything is all right. I'm also pretty sure when LJW did an article comparing costs of name brand drugs at different pharmacies in town roundcorner was cheapest.

badger 12 years, 2 months ago

Gno e, I regret to infor you that you have, well, so e disreputable cousins.

They steal y words, y keys, and yesterday one of the stole y cup of coffee and left it sitting in the break roo when I clearly re e ber bringing it back to y desk.

I'm not casting any aspersions on the bearded variety of gno e, but there is a certain population of gno es with a decidedly larcenous bent.

mom_of_three 12 years, 2 months ago

I know how much pharmacists can make at their own stores. Why do you think locally owned pharmacies often sell over the counter products and/or gift items? It is to make up the difference for insurance plans, and medicaid prices. Yes, pharmacists usually make a good living, but I don't think they gouge anyone worse than the doctor's offices. Don't most pharmacies make money through quantity of prescriptions. So if you have quality service, you will have more customers = more money.

mom_of_three 12 years, 2 months ago

My father in law is a semi-retired pharmacist, and ran his own store for over 20 years. Yes, he made a good living, but also worked very hard. Customers called him at all hours to get refills or with an emergency. My husband used to make deliveries for him.

But the pharmacists are just trying to stay in business with this new drug plan. It is not pharmacist friendly. It's big corporation friendly.

Godot 12 years, 2 months ago

Young adults should figure out what service or product there is that cannot be provided by a big chain store or over the internet, and then go into that business, because, unfortunately, that is the future.

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